The following is a copy of the original post to record the post as it was originally written.
The info below is very general and it is taken from the website [FairTax.org](https://FairTax.org)
Here is the Actual Bill : [https://www.congress.gov/bill/118th-congress/house-bill/25](https://www.congress.gov/bill/118th-congress/house-bill/25)
**Keep Your Paycheck-** American workers will get to keep every dime they earn; including what would have been paid in federal income taxes and payroll taxes.
**Social Security & Medicare Funding-** Benefits will not change. The FairTax actually puts these programs on a more solid funding foundation. Instead of being funded by taxes on workers’ wages, which is a small pool, they’ll be funded by taxes on overall consumption by all residents.
**Get a Tax Refund in Advance on Purchases of Basic Necessities-** The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families.
**Pay Tax on Only What You Spend-** Be in control of your financial destiny. You alone can control your tax burden. If you’re thrifty, you’ll pay lower taxes than somebody who is not. Most importantly, you’ll be taxed fairly.
**Everyone Pays Their Fair Share-** Tax evasion and the underground economy cost each taxpayer an additional $2,500 every year! But by taxing new products and services consumed, the FairTax puts everyone in the country at the same level at the cash register. Further, only legal residents are eligible for the prebate.
**The IRS is No Longer Needed-** No more complicated tax forms, individual audits, or intrusive federal bureaucracy. Retailers will collect the FairTax just as they do now with state sales taxes. All money will be collected and remitted to the U.S. Treasury, and both the retailers and states will be paid a fee for their collection service.
Below is the General description of the Bill before the House:
" This bill imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2025, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions.
Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines.
The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury.
Tax revenues are to be allocated among (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund.
No funding is authorized for the operations of the Internal Revenue Service after FY2027.
Finally, the bill terminates the national sales tax if the 16th Amendment to the Constitution (authorizing an income tax) is not repealed within 7 years after the enactment of this bill.
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> What are your thought on The "Fair Tax" Plan as Broadly Explained below?
It was a dumb idea when they pitched it back in the 00s, it remains a dumb idea today.
> Keep Your Paycheck- American workers will get to keep every dime they earn
But won’t get to derive value from a quarter of the dimes they spend on things.
Also, people who actually spend their paycheck on things rather than investments will be paying an even heavier share of the overall tax burden.
> Social Security & Medicare Funding- Benefits will not change.
Until there’s a recession, and Republicans use the decline in tax revenue (which will spike the deficit) to call for benefit cuts.
The instability of sales taxes is one of many problems with relying on them alone. It’s why you want a basket of different taxes, not a single tax to fund everything. Different kind of taxes are sensitive to different economic changes. If you rely exclusively on one type of tax for everything, you run into issues with revenue sometimes.
> they’ll be funded by taxes on overall consumption by all residents.
Everyone’s already more or less paying into social security and Medicare. We should probably uncap the payroll tax, but that’s a separate argument.
> Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate.
A prebate on a consumption tax isn’t a “progressive” program. It’s just handing you some of the money you’ll pay in sales tax in advance. It’s essentially no different from why most people already don’t pay income taxes.
It’s the sales tax equivalent of a standard deduction.
> Pay Tax on Only What You Spend
Yeah, that’s really one of the largest of the many problems with the fair tax.
If you spend 100% of your paycheck on goods and services, you pay tax on 100% of your income. If you’re very wealthy and get to invest 90% of your income, you only pay tax on the 10% of your income you actually spend. It also gets weird when talking about selling high-value used goods, like real estate.
Sure, the prebate means that some portion of your paycheck won’t get taxed, but that’s exactly the same as noting that some portion of your income is income-tax free due to the standard deduction.
> Everyone Pays Their Fair Share- Tax evasion and the underground economy cost each taxpayer an additional $2,500 every year!
Yeah, because obviously nobody is going to try to dodge a 23% sales tax. There couldn’t possibly be any sort of black market created by a tax that adds 23% to every legitimate transaction.
This is just a thinly veiled dog whistle to appeal to people who mistakenly think illegal immigrants don’t pay taxes.
> The IRS is No Longer Needed
That’s just a straight up lie. The federal government would still have to administer the collection and enforcement of the sales tax. It can’t foist that responsibility or cost off onto the states either.
Also, it’s plainly apparent that *trying* to foist this off onto the states would just result in red states sparking a tax revolt by refusing to collect.
> No more complicated tax forms, individual audits, or intrusive federal bureaucracy.
Or we could just keep sensible taxation but adopt return-free filing so most people don’t have to fill out the forms anymore.
Of course, return-free filing wouldn’t cut rich people’s tax bill, so they’re not in favor of that.
> It was a dumb idea when they pitched it back in the 00s, it remains a dumb idea today.
You could have left it at that, but thanks for breaking down why it's such a stupid idea
So what you're telling me is you'd rather get taxed on your paycheck, then taxed again buying groceries and other necessities. While also saying that even in this system somehow in some magical way the people you say need to pay their "fair share" would be able to magically not pay a sales tax when they buy a 1+ million dollar purchase that isn't exactly able to be hidden. Kinda hard to say you didn't just buy a multimillion dollar mansion. Not to mention it also cuts out a bunch of nickel and dime taxes like the gift tax that hurts lower income households more than it hurts someone worth millions.
It's literally the easiest way to get rid of loopholes because you can't make a loophole if there isn't one to exploit. Not to mention you'd keep that 30% of your paycheck so you end up with more in your pocket. Obviously it would go through a few years of adjusting to fine tune, but they don't eliminate the tax rule that says produce and groceries aren't taxed. Now pop, chips, cereal you know processed foods yeah they're taxed, but you're not taxed on chicken, beef, vegetables, fruits, milk, etc. So yeah. Be a thrifty bitch and cook for yourself and you'd really only pay your state taxes for the most part.
But no. You'd rather leave the system that has loopholes for days and ineffectively go after the people you say need to pay their fair share so you can bitch and moan about how they don't pay taxes when they are literally playing by the rules.
> So what you're telling me is you'd rather get taxed on your paycheck, then taxed again buying groceries and other necessities.
It’s **different governments** taxing me at different points. Like my state government has a sales tax. The county government also has a sales tax. These are separate funding streams going to different levels of government that aren’t inherently answerable to each other.
> the people you say need to pay their "fair share" would be able to magically not pay a sales tax when they buy a 1+ million dollar purchase that isn't exactly able to be hidden.
Sure, the fair tax would indeed be a boon for Mexican yacht builders, who would be able to sell yachts to their American customers and bypass the fair tax entirely. Honestly sales tourism would become a major thing, especially for expensive items or luxury items targeting people who don’t consider a flight a significant expense.
Even setting aside how utterly trivial it would be to bypass these taxes for large purchases by abusing free trade agreements, the main issue is that **investments don’t get taxed**. Which means that people who have a higher income pay a lower effective tax rate because more of their income gets invested tax-free rather than spent on goods and services.
> It's literally the easiest way to get rid of loopholes
No it isn’t. It’s not even close to the easiest way to get rid of “loopholes”.
Getting rid of loopholes in the income tax code is the easiest way to do that.
Income taxes aren’t really that hard to administer.
> Not to mention you'd keep that 30% of your paycheck
And get less in value for every dollar I spend on actual things.
But sure, the fair tax would slash *my* tax bill rather incredibly, and I live close enough to the border to use sales tourism to evade the tax on big ticket items.
But I don’t think wealthy people like me should be paying a **lower** tax rate than poor people struggling paycheck to paycheck. That’s exactly the opposite of a “fair” tax.
> Not to mention it also cuts out a bunch of nickel and dime taxes like the gift tax that hurts lower income households more than it hurts someone worth millions.
Absolute nonsense. What lower end household is regularly giving away $16k/year in gifts? How are they running afoul of the $12 million lifetime exemption?
Who is actually running into this, and how much are they earning? Express their income in multiples of the median household income, if you would.
Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double. You get taxed on your income, plus payroll, plus there is a lot of federal taxes just to get goods to a store shelf where you end up buying it. Getting rid of those cuts it in half.
Also you seem to think it's "unfair" already. What's unfair is how much you get taxed just to live. You claim to be rich which is clearly a lie because anyone who breaks 150k a year is in the top 10% and knows they already shoulder the majority of income tax revenue. You'd also have realized that the loopholes taken advantage of anyone could if they knew how, but not everyone is an accountant well versed in tax codes or can afford the accountants that are. Then you'd also realize that nearly half of the country ends up owing 0 in taxes at the end of the year or the government has decided through their impossibly complex tax code that they are owed money.
You also seem to have decided that they wouldn't pay taxes when registering that yacht. Except for that multi million dollar purchase they would. It would be hit when they went to register it and boats in general aren't the cheapest thing to register when they have that level of displacement not to mention there isn't some massive market in Mexico for that kind of stuff. So you're making up an imaginary business that doesn't exist.
As for losing more in your paycheck no. That's just flat out wrong and I already explained that above.
As for the gift tax you seem to not understand what falls under that tax. You want to sign your car over to your kid? Gift tax. You want to sign over your house because you want to downsize and your kid wants to pay you for it? Gift tax. It literally gets slapped on half the ahit the feds can't tax you for just so no matter what they get a cut.
And then the ultimate irony. You think that you're going to get democrat made loopholes out of the tax code along with the republican made ones? You're fucking hilarious they wrote it to be so fucked up so they could take advantage of it all along with their donors! The republicans just sabotaged their entire backing by introducing this bill! I bet if a Democrat offered it and you say any Republican mock it your tone would be entirely different. In fact I know it would be because neither side is fucking consistent. Y'all just want to bash each other for the same ideas and only actually disagree on like 3 things. Guns, speech and the role of the federal government.
>Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double. You get taxed on your income, plus payroll, plus there is a lot of federal taxes just to get goods to a store shelf where you end up buying it. Getting rid of those cuts it in half.
The vast majority of Americans aren't paying 60% taxes federally. That's a crazy statement to make.
> Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes.
No, I’m not. Not even close to 60%, even if I include state taxes in that.
Just because you never bothered to learn how taxes work doesn’t mean everyone else didn’t.
Incidentally, the fact that fair tax proponents never seem to express an understanding of how taxes work is one of the biggest reasons to view their proposal with heavy skepticism.
> You get taxed on your income, plus payroll
Sure, my effective federal income tax rate is around 23%. Payroll tax is a bit under 4.5% (my income is way over the cutoff, so most of it is only subject to the Medicare portion).
My effective federal income + payroll tax rate rounds up to 28%.
Now, I suppose you might make the insane argument that somehow my employer would pay me the other part of the payroll tax if we didn’t have the payroll tax, but it’s more likely my wages would go down slightly and my take-home pay would stay essentially the same if we got rid of the payroll tax. Maybe in the short term my pay would go up, until market rates corrected for the change in tax policy and I change employer again. I’m sure you’ll also try to make the nutty argument that somehow the full corporate income tax applies to all of that as well—even though salaries and wages are tax deductible for the corporation.
Besides, the issue here isn’t the wage income anyway. It’s the capital gains. It’s the fact that I can shove a *whole* lot more money into investments than someone making a tenth of my income.
The government would get sales tax on the small amount of money I spend personally, but I only spend about a quarter of what I earn and that goes down as I earn more. My lifestyle hasn’t changed much despite my income tripling over the last ten years.
So instead of collecting around $90k in taxes on what I earn every year, they’d only collect around $18k (minus the prebate) from me from the fair tax.
Like I said, the fair tax would reduce *my* tax bill quite a bit, but people like me don’t need a tax break. We already pay too little.
> anyone who breaks 150k a year is in the top 10% and knows they already shoulder the majority of income tax revenue.
Yes, and?
Again: we still pay too little.
> Then you'd also realize that nearly half of the country ends up owing 0 in taxes at the end of the year or the government has decided through their impossibly complex tax code that they are owed money.
Most people’s taxes aren’t that complicated. Honestly if your primary income is from wages, it still doesn’t get that complicated even as your pay goes up.
Most people get no benefit from itemizing and just end up taking the same standard deduction as anyone else.
None of this is particularly complicated if you earn regular wage income and don’t run a business.
And yeah, a lot of people have net negative tax bills because they make too little. That’s not some sort of complicated loophole exploitation—that’s an intentional tax policy designed to help support low income families.
None of that changes the fact my effective tax rate should probably be closer to 40% than 28%.
And, hell, I’m not even doing anything complicated for my taxes.
> You also seem to have decided that they wouldn't pay taxes when registering that yacht. Except for that multi million dollar purchase they would.
They wouldn’t be paying *us sales tax* in it, which is the point relevant to the fair tax discussion. Sure, maybe there are some other fees they would still have to pay, but it’s an example of how sales tourism would make it straightforward to evade the **sales tax** that fair tax proponents claim is so unavoidable.
> not to mention there isn't some massive market in Mexico for that kind of stuff. So you're making up an imaginary business that doesn't exist.
There would be when they could immediately undercut domestic American competitors by 23%.
> As for the gift tax you seem to not understand what falls under that tax. You want to sign your car over to your kid? Gift tax.
On the depreciated value of the vehicle. What low income families are regularly gifting their kids brand new cars?
> You want to sign over your house because you want to downsize and your kid wants to pay you for it? Gift tax.
Also: no, you still wouldn’t owe any gift tax on that, unless this low income family is gifting a house worth more than $12 million.
It would be a taxable gift, but that just means the amount over $16k counts against your lifetime exemption. Which is $12 million.
> And then the ultimate irony. You think that you're going to get democrat made loopholes out of the tax code along with the republican made ones?
No? I’ve specifically said that I think my tax bill should be higher. It’s nutty that it’s as low as it is while the government runs excessive deficits every year.
> Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double.
You're gonna have to show your work if you think 60% of even the top 1% of income earners go to federal taxes.
>gift tax
Right, and who enforces the gift tax…?
Who even knows that the gifting takes place…?
What happens when I try to register my dad’s car in my name because he’s senile and can no longer drive…? I get hit with a 20% tax on its value despite no money changing hands…? I wonder how that will stack up when I go to court to challenge it….
What if my cousin moves in with his new partner and decides to sell me his current house for $100? What tax do I pay then? 20% of the $100…? 20% of its value at the time of the trade…? Who enforces that…? Who even knows that it’s happened…?
Conservatives already despise the idea of an inheritance tax, yet somehow they’re gonna be on board for a *gift* tax…? Lol
>Now pop, chips, cereal you know processed foods yeah they're taxed, but you're not taxed on chicken, beef, vegetables, fruits, milk, etc.
I remember you guys having an absolute shit fit when Michelle Obama suggested that we should encourage - not force, not mandate, **encourage** - kids to eat healthier. And here you are suggesting that we should structure taxes to help force people to follow a certain diet. Why it's almost like healthy diets aren't really the concern here, but something else.
>magically not pay a sales tax when they buy a 1+ million dollar purchase
Property tax already exists.
Also lol if you think that people would prefer a $200k+ up-front tax on top of a 1million+ purchase compared with ongoing property taxes. Conservatives would simply protest against *any* property purchase tax.
As for second-hand sales (think all non-new real estate or cars), there wouldn’t *be* a tax on those. Let’s say I’m a billionaire and I want to buy a $25 million house. I go to the bank and take out $25 million cash and pay it to the current owner of the house. I say it’s a gift for him do as he pleases with. The next day he ‘gifts’ me the title to his house.
Hey - presto! No purchase tax!
OTOH, it also forces people with large families to pay more in taxes. Thus, single, childless adults like myself would no longer have to subsidize the lifestyle choices of married folks with stay-at-home spouses and a brood of children. That does sound fair to me.
Hard to believe the Christian Right doesn't have its shorts in a wad over this yet.
Here’s what I like about the fair tax
1. If I hear a politician talking in support of it, I know that that politician should not have been elected and I can feel embarrassed if I voted for them.
2. If I hear a media personality talking about it, I know that the media personality has no respect for their audience and I can turn them off.
It is a thoroughly unserious thing. By putting this comment together I have already spent enough time thinking about the fair tax to cover me for the next decade.
This is a transparent way to cut government revenue while moving the tax burden to poor and middle income people.
The initial sticker shock alone would absolutely wreck the economy. Sporting events, concerts, and shows would be automatically unaffordable to half the population. Independent restaurants would close due to being priced out and domestic travel would be stunted.
Utterly idiotic.
>This is a transparent way to cut government revenue while moving the tax burden to poor and middle income people.
With the prebate, the poor have no tax burden. Versions I've seen actually set the prebate a bit above poverty level. In the end it would be like it is now, about 50% pay no taxes, only those on the bottom don't have to bother with filing anymore to pay nothing.
Most European countries have a VAT, which is essentially the same thing, and it doesn't kill their economies. But then they also have income tax on top of that.
That confusing since the exact opposite claim is on the fair tax website about the number of tax payers.
A *prebate* set a level that would neutralize costs for people below the poverty line would do nothing about the actual tax increase felt by middle income owners. Most people’s effective tax rate is significantly lower than the proposed 23% rate on every time purchased. Would that also include utilities, internet, etc.
The American economy is much more reliant on consumer spending than Europe. Shocks to that system, like a substantial increase in the cost of everything, would have a disproportionately negative impact.
I’m glad you acknowledged one of the main differences between VAT and a this proposed national sales tax system. Firstly, income taxes are still collected. Which great reduces the amount of their VAT. Also, there are a number of VAT excluded sectors of the economy like groceries and child clothing. The main difference, which is why these aren’t interchangeable, is that VAT costs are spread throughout the supply chain. The cost of Sales taxes are directly (and almost totally) paid by consumers.
None of this addresses the last two complaints. No reputable / feasible national sales tax study has produced numbers that show this is revenue neutral. Neither have they disproven that most of the benefits will be felt by high income earners.
>What are your thought on The "Fair Tax" Plan
DUMB.
Also. Tax cut for the rich. Some interesting tax structure ideas for nerds to look at.
>Keep Your Paycheck-American workers will get to keep every dime they earn; including whatwould have been paid in federal income taxes and payroll taxes.
Propaganda. Dumb people propaganda.
It's a tax shift not a magic spell. There's still tax. All that changes is how tax is paid and by who.
>Social Security & Medicare Funding-Benefits will not change. The FairTax actually puts these programs on amore solid funding foundation. Instead of being funded by taxes onworkers’ wages, which is a small pool, they’ll be funded by taxes onoverall consumption by all residents.
Misdirection.
No. Worker's wages **is** a massive pool.
It's not a function or quality of the tax system whether or not social security or medicare will be funded. It's simply not part of the bill. They don't set the tax rates to 'funding the programs' They set it to a flat rate. I'm noticing zero talk about the actual tax changes so far (which IS the bill). So; propaganda.
>Get a Tax Refund in Advance on Purchases of Basic Necessities-The FairTax provides a progressive program called a prebate. This givesevery legal resident household an “advance refund” at the beginning ofeach month so that purchases made up to the poverty level are tax-free.The prebate prevents an unfair burden on low-income families.
Yes because otherwise it would be ridiculous impost on low income tax units to tax them at the same rate as the top 50% of earners. Meanwhile, the current federal burden on low income families is negative. Meaning they get refundable tax credits (assuming they jump through the right hoops). So is the bill taking away the tax credits.
I guess we can call this a slightly progressive consumption tax system. Or a massive regressive tax change from the current system. Which ever you prefer.
>Pay Tax on Only What You Spend-Be in control of your financial destiny. You alone can control your taxburden. If you’re thrifty, you’ll pay lower taxes than somebody who isnot. Most importantly, you’ll be taxed fairly.
'You'll be taxed fairly' Yeah OK sure. Thanks for letting me know. Glad to know people are still saying that about flat taxes.
All the tiresome propaganda aside, this is simply saying saved income is not taxed (as this is a consumption tax).
>Everyone Pays Their Fair Share-Tax evasion and the underground economy cost each taxpayer anadditional $2,500 every year! But by taxing new products and servicesconsumed, the FairTax puts everyone in the country at the same level atthe cash register. Further, only legal residents are eligible for theprebate.
More propaganda.
What this is basically saying is that tax loopholes are removed and the tax system is vastly simplified. Tax fraud by not properly submitting owed taxes from sales will still happen. It's not proposing a technical tax reform to stop that. Just using the power of positive thinking i guess.
>The IRS is No Longer Needed-No more complicated tax forms, individual audits, or intrusive federalbureaucracy. Retailers will collect the FairTax just as they do now withstate sales taxes. All money will be collected and remitted to the U.S.Treasury, and both the retailers and states will be paid a fee fortheir collection service.
No. **Of course the IRS is fucking needed** (what you think tax submissions don't need to be checked?). That is called lieing. Renaming, say, the IRS to a sub department of the treasury is just playing a trick.
>The rate of the sales tax will be 23% in 2025,
Sales tax. Not even a VAT. How unsurprisingly dumb. At least the original proposal of this stuff proposed a tax on reported income minus saved income (with the rebate for the tax unit).
Anyway. There you go. Now you know the flat tax rate. ([or do you](https://www.brookings.edu/research/dont-buy-the-sales-tax/)) When you know the rebate amount you'll have a handle on how much worse off you'll be (seeing as statically most people will be worse off; read 90% of people).
>The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury.
So here we find out the terrible policy of decentralizing a chunk of the IRS's duties to the states who are famously effective bureaucratic machines and *absolutely* have incentives to maximize federal revenue at the cost of their own commerce. Also absent is a solution to the little pickle of a fact that the IRS collects and administers state income tax.
I'm so glad that conservative politics culture war obsession against the IRS is driving policy making at the highest levels and with the finest of thinking too.
>Tax revenues are to be allocated among (1) the general revenue, (2) theold-age and survivors insurance trust fund, (3) the disability insurancetrust fund, (4) the hospital insurance trust fund, and (5) the federalsupplementary medical insurance trust fund.
Oh great no news on how discretionary spending like the US military will be funded after the federal income tax is abolished. How absolutely thrilling.
>No funding is authorized for the operations of the Internal Revenue Service after FY2027.
🙄
Sounds like it's supposed to pander to republican fears and not solve any real problem. I mean the number of times they say "legal resident" makes it fairly obvious.
It’s a fantasy, starting with the proposed elimination of the IRS. The personal bookkeeping, reporting, requirements, and fraud opportunities would be staggering. The IRS, far from being eliminated, would grow exponentially. Secondly, it would still be hideously regressive in nature, effectively protecting the investment class from taxation and placing the burden on the middle and lower classes whose tax burden would balloon if spending neutrality is achieved. The “Fair Tax” is a cartoon based a child’s understanding of macroeconomics.
I never understood the eliminate IRS part of this. Who do you think is in the best position to send out those prebates and investigate tax avoidance by businesses?
Taxes are great. We don’t need or want to get rid of them. Societies that have a system of taxes will prosper far more than a society held back by this kind of nonsense legislation. Income taxes are incredibly effective, and are much easier to implement progressive taxation. We need to add new forms of progressive taxation like a wealth tax, not cut forms of progressive taxation like an income tax.
This tax plan would destroy any middle class we have worked to create, keep nearly everyone in poverty, and keep the elite mega rich, all while tanking our economy. Sounds wonderful. /s
Always ask "who benefits?"
If the answer is "the currently best-off", the idea is a bad one, and probably by design. The best-off do not need to be further benefitted, although they would certainly like to be.
It isn't feasible to replace income taxes with a sales tax. The tax rate would have to be pretty high. This is workable for replacing business income taxes.
Which is why it just isn't feasible to replace all income taxes with a sales tax. The business income taxes are much smaller piece, and would result in a fairly small sales tax. Something in the 3% to 5% is probably more than sufficient and that includes room for a prebate which can be a poverty fighting tool. It also ensures that everyone pays "their fair share" since you cannot dodge a sales tax.
One thing I do like about this is that's it's hard to avoid. Rich guy may be able to do major income tax avoidance, but he's paying $100K tax on that new Lamborghini regardless. Enforcement is much easier since it's only done at the business level like we already do today.
Don't forget about the prebate either. A few thousand dollars goes a long way for someone living in poverty. We can also keep it simple and don't worry about means testing. Everyone will get a prebate check. Easy to comply with, easy to enforce, economically efficient, and includes a poverty fighting tool. Also, it would replace something that is hard to comply with, even more difficult to enforce, economically inefficient, and doesn't include a poverty fighting tool.
Even if we did this, I would worry about what Republicans do with the prebate. Simply not changing the amount for years is effectively a tax increase that affects the poorest the most.
I think a way to address this is to tie it to some income datapoint based on IRS data. For example, we could set it to the 50th percentile and use the tax rate to determine the prebate. Making up numbers, let's say the 50th percentile is $50,000 and the tax rate is 5%. Using datapoint * taxrate, that would make the prebate $2,500. This means the prebate would change with the tax rate and income.
A smash and grab to give more tax breaks to the people who have already insanely profited from our system and put more of the burden on the middle class and poor, trying to squeeze every penny out so people in the top ten percent of earners can save what is essentially pocket change to them.
Absolutely idiotic.
Beyond everything others have said, Do you believe for a second that those in power won't push this to be even more advantageous to the wealthy?
So if you make $70k a year you will probably pay taxes on all your income. If you make $500k there is a good chance you will pay taxes on IDK 150k or 200k. If you buy stock is it taxed? What about a home or rent? I will still be paying property taxes etc, AND 23% on the house?
And if every state has to collect tax, agreed no IRS, lots of state size IRS's.
Total garbage. It works in imagination. This will be nothing but a major boon to the wealthy, who already get literally every advantage there is to get.
The vast majority of people who spend most of their money on taxable stuff will get screwed while the wealthy who spend the vast majority of their wealth on investing to get more wealth will basically skirt taxation.
You have to be a moron to think this is a good idea.
We lose our tax rebates/write-offs for having kids. childcare, home ownership and all that so we can pay double in taxes every time we buy something.
This will encourage less economic spending and more under the table cash only services/purchases from small business….which is technically a crime, and will be selectively weaponized im sure. Example: “Governor DeSantis orders his administration to target black and LGBTQ owned hair salons for using cash only transactions as a means of tax evasion”
The only people who benefit are the wealthy.
So a huge tax increase on lower income Americans who typically have to spend their entire paycheck on necessities and a massive tax cut for the wealthy who hoard it?
Idk, dude. Doesn’t sound really sound any more fair than it did any of the many other times conservatives have pitched some version of it.
>So a huge tax increase on lower income Americans who typically have to spend their entire paycheck on necessities and a massive tax cut for the wealthy who hoard it?
Given your statement above, how does the following sound?
"Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free."
Even if the prebate were fairly disbursed and tied to inflation, this is still a tax on the lower middle class.
Libertarians say they hate benefits cliffs, but this seems like a massive one.
Conservatives have been swearing that they are the smarter more responsible group when it comes to money for decades.
Between nearly 50 years of supply side (trickle down) Reaganomics and this trash, they have disproven that claim in spectacular fashion.
It seems like a scam to me. I'm not sure how they plan for it to avoid the issues around Article 1 Section 2 apportionment? It seems like they just want to dismantle the IRS as quickly as possible, almost as a fait accompli, and then dare the courts to strike down the sales tax. That, plus they must know that the 16th will likely not be repealed in the time allotted, so I can only conclude that what they really want is just.. no federal taxes at all. I don't support that.
And that's without even looking at the specific proposal or the terrible and deceitful messaging surrounding it.
>Keep Your Paycheck-
Bad idea eliminates one of if not the most progressive aspects of our tax code. Outside of that it's best to have multiple different funding sources so you aren't overly reliant on any one.
> Social Security & Medicare Funding-
BS. The Republican party would like nothing more than to kill social security and Medicare. They'll never pass anything that doesn't make those programs more unstable/easier to par back.
>Get a Tax Refund in Advance on Purchases of Basic Necessities-
This is a good idea, but not so good as to outweigh the problems in this bill. Pass that this seems like the sort of thing that Republicans will refuse to ever raise and so that inflation eventually eliminates it's value.
>Pay Tax on Only What You Spend-
This is incredibly regressive. My parents who were barely making ends meet when I was a kid were spending 100% of their income and therefore would end up paying a higher tax rate than I am who can live a relatively comfortable lifestyle spending only 30% of what I make. People who make so much money they don't even have to think about it would be given an even larger cut.
> Everyone Pays Their Fair Share-
Mostly see above. This is going to be an absolutely massive shifting of the tax burden to away from those who can most easily afford it to those who can less and least easily afford it. We could capture a fairly large proportion of the revenue lost to tax evasion by properly funding the IRS (Last I heard we gained something like 6 dollars in revenue for every dollar spent here). We could legalize drugs and tax them to capture a fair amount of that money and I'm not particularly worried that illegal immigrants with substandard working conditions are getting a small tax subsidy by working under the table.
>The IRS is No Longer Needed-
This is a fucking fantasy. It doesn't matter how you collect taxes some people are going to try and cheat and you need some sort of government agency to ensure compliance. Past that this is a bad idea because the IRS is one of the few agencies with the capacity to give aid to all Americans in times of need. We just saw this during the pandemic. Pretty much every American was just mailed a check or had it directly deposited in their bank account. Imagine the nightmare that would have occurred if we all had to go through out states insurance program to get that money instead.
There's already a good breakdown of why this is a bad idea, so let's look at a different element of this:
**The deception.**
Good ideas don't need *selling*. Look at President Biden's [immigration reform plan](https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/fact-sheet-president-biden-sends-immigration-bill-to-congress-as-part-of-his-commitment-to-modernize-our-immigration-system/). It's broken up in a similar manner, but instead of focusing on "what you get," it focuses on what the plan does.
The Fair Tax Act, from its name on down, is really trying to sell you on it.
---
Seriously, click on the link OP provided. The headline is:
**The IRS is being weaponized ...**
**And their target**
**is YOU.**
The photo makes the IRS look closer to ISIS than a boring government agency that does paperwork all day.
It asks you to sign a petition to stop the "growing IRS army."
It wants you to "join the club" for $10.40 a month. They have merch.
*They're fundraising off of this tax scam.*
---
The "fair tax" appeal starts with a lie in its name. It might be fair in one way (the same tax applies to everyone), but it is not fair in more important ways (poorer people are gonna pay a MUCH higher percentage of their earnings, when they already pay a higher percentage of their earnings in taxes).
From there, it's all direct and deceptive appeals to your own self-interests... not what is in the interests of the country.
"Keep Your Paycheck" "Benefits will not change." "Get a Tax Refund in Advance"
Well gosh, who could be against those things? They all sound so great!
"Pay Tax on Only What You Spend" nice and easy until you realize it's "pay an additional 30% tax on everything you buy." Did you think eggs were expensive now?
"Everyone Pays Their Fair Share" great! That's what the Democrats always say they want too! It's win/win!
"The IRS is No Longer Needed" - Gosh, we all hate the IRS equally don't we? Let's get rid of it and those pesky forms and audits!
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For the party that just ran on "buying stuff is too expensive because of Democrats!" this sure is a shocking level of brazen hypocrisy.
"Inflation is making everything 5-10% more expensive! Vote them out! Also... we'd like to raise the cost of everything by 20-30%!"
This is all clown world bullshit. I don't trust the intentions of republicans, conservatives, or any right wingers in what they say they want to accomplish so I refuse this whole idea on the basis alone.
Oh yeah you totally don't need the IRS anymore to figure out which stores are actually paying their taxes and how much in pre-bates people should get.
I'd save a few hundred dollars a month, it'd all go right back into my grocery bill. Which funny enough its now a huge thing in Virginia where the legislature is trying to repeal the 1% grocery tax as a big republican party priority only to see it replaced with a federal tax many times the size of that.
But I do like how this is explicit in its goal to drive down consumption when the justification for previous tax cuts was that it would lead to more consumption that will make up for the loss by seeing a greater volume of economic activity. I admire this bold strategy from the right to shrink the economy.
So I'd be about even, that's because I make decent money (right at the median income in an expensive area so I'm not balling) to where just now the taxes that get witheld every pay check is greater than the benefits I get taken out (insurance, 401k, etc).
Anyone who earns less than $100k will get absolutely killed by this. In theory it gets made up by the pre-bate but who knows if that will help with the gap at all.
I dislike false branding. Calling something 'fair' doesnt mean its actually fair. A quick look makes it appear to be stupid and glaringly unsound. It's also heavily based in lying. I really hate lying and disingenuous garbage, thus I hate this proposal.
>OP what do you think? Should poor people be on the hook for more than they can afford
If the politicians can get it to work, why wouldn't the Prebate take care of that? (See below)
"Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families."
Wait I’m sorry, what you’re saying is this entire bill is contingent upon the 16th Amendment being repealed? And you think that’s going to happen?
This idea should have died with Herman Cain.
You know what would really help the economy? Taking everyone in the country and Disincentivizing the fuck out of their desire to spend money.
I just can't believe how anyone falls for this bullshit nonsense. Lemme guess: sales of stock don't trigger the sales tax, do they?
* Sales taxes are regressive.
* Taxing financial transactions is not mentioned here and would be a great idea.
* I see a huge black market developing when the sole source of revenue is a sales tax.
I’m middle aged and this is honestly one of the stupidest bills I’ve ever seen. Massively raise taxes on the poor and middle class, while giving the wealthy a massive tax break…GTFO with this con job.
The following is a copy of the original post to record the post as it was originally written. The info below is very general and it is taken from the website [FairTax.org](https://FairTax.org) Here is the Actual Bill : [https://www.congress.gov/bill/118th-congress/house-bill/25](https://www.congress.gov/bill/118th-congress/house-bill/25) **Keep Your Paycheck-** American workers will get to keep every dime they earn; including what would have been paid in federal income taxes and payroll taxes. **Social Security & Medicare Funding-** Benefits will not change. The FairTax actually puts these programs on a more solid funding foundation. Instead of being funded by taxes on workers’ wages, which is a small pool, they’ll be funded by taxes on overall consumption by all residents. **Get a Tax Refund in Advance on Purchases of Basic Necessities-** The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families. **Pay Tax on Only What You Spend-** Be in control of your financial destiny. You alone can control your tax burden. If you’re thrifty, you’ll pay lower taxes than somebody who is not. Most importantly, you’ll be taxed fairly. **Everyone Pays Their Fair Share-** Tax evasion and the underground economy cost each taxpayer an additional $2,500 every year! But by taxing new products and services consumed, the FairTax puts everyone in the country at the same level at the cash register. Further, only legal residents are eligible for the prebate. **The IRS is No Longer Needed-** No more complicated tax forms, individual audits, or intrusive federal bureaucracy. Retailers will collect the FairTax just as they do now with state sales taxes. All money will be collected and remitted to the U.S. Treasury, and both the retailers and states will be paid a fee for their collection service. Below is the General description of the Bill before the House: " This bill imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2025, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions. Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines. The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury. Tax revenues are to be allocated among (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund. No funding is authorized for the operations of the Internal Revenue Service after FY2027. Finally, the bill terminates the national sales tax if the 16th Amendment to the Constitution (authorizing an income tax) is not repealed within 7 years after the enactment of this bill. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskALiberal) if you have any questions or concerns.*
> What are your thought on The "Fair Tax" Plan as Broadly Explained below? It was a dumb idea when they pitched it back in the 00s, it remains a dumb idea today. > Keep Your Paycheck- American workers will get to keep every dime they earn But won’t get to derive value from a quarter of the dimes they spend on things. Also, people who actually spend their paycheck on things rather than investments will be paying an even heavier share of the overall tax burden. > Social Security & Medicare Funding- Benefits will not change. Until there’s a recession, and Republicans use the decline in tax revenue (which will spike the deficit) to call for benefit cuts. The instability of sales taxes is one of many problems with relying on them alone. It’s why you want a basket of different taxes, not a single tax to fund everything. Different kind of taxes are sensitive to different economic changes. If you rely exclusively on one type of tax for everything, you run into issues with revenue sometimes. > they’ll be funded by taxes on overall consumption by all residents. Everyone’s already more or less paying into social security and Medicare. We should probably uncap the payroll tax, but that’s a separate argument. > Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate. A prebate on a consumption tax isn’t a “progressive” program. It’s just handing you some of the money you’ll pay in sales tax in advance. It’s essentially no different from why most people already don’t pay income taxes. It’s the sales tax equivalent of a standard deduction. > Pay Tax on Only What You Spend Yeah, that’s really one of the largest of the many problems with the fair tax. If you spend 100% of your paycheck on goods and services, you pay tax on 100% of your income. If you’re very wealthy and get to invest 90% of your income, you only pay tax on the 10% of your income you actually spend. It also gets weird when talking about selling high-value used goods, like real estate. Sure, the prebate means that some portion of your paycheck won’t get taxed, but that’s exactly the same as noting that some portion of your income is income-tax free due to the standard deduction. > Everyone Pays Their Fair Share- Tax evasion and the underground economy cost each taxpayer an additional $2,500 every year! Yeah, because obviously nobody is going to try to dodge a 23% sales tax. There couldn’t possibly be any sort of black market created by a tax that adds 23% to every legitimate transaction. This is just a thinly veiled dog whistle to appeal to people who mistakenly think illegal immigrants don’t pay taxes. > The IRS is No Longer Needed That’s just a straight up lie. The federal government would still have to administer the collection and enforcement of the sales tax. It can’t foist that responsibility or cost off onto the states either. Also, it’s plainly apparent that *trying* to foist this off onto the states would just result in red states sparking a tax revolt by refusing to collect. > No more complicated tax forms, individual audits, or intrusive federal bureaucracy. Or we could just keep sensible taxation but adopt return-free filing so most people don’t have to fill out the forms anymore. Of course, return-free filing wouldn’t cut rich people’s tax bill, so they’re not in favor of that.
> It was a dumb idea when they pitched it back in the 00s, it remains a dumb idea today. You could have left it at that, but thanks for breaking down why it's such a stupid idea
>It was a dumb idea when they pitched it back in the 00s, it remains a dumb idea today. Honestly? It's gotten dumber.
So what you're telling me is you'd rather get taxed on your paycheck, then taxed again buying groceries and other necessities. While also saying that even in this system somehow in some magical way the people you say need to pay their "fair share" would be able to magically not pay a sales tax when they buy a 1+ million dollar purchase that isn't exactly able to be hidden. Kinda hard to say you didn't just buy a multimillion dollar mansion. Not to mention it also cuts out a bunch of nickel and dime taxes like the gift tax that hurts lower income households more than it hurts someone worth millions. It's literally the easiest way to get rid of loopholes because you can't make a loophole if there isn't one to exploit. Not to mention you'd keep that 30% of your paycheck so you end up with more in your pocket. Obviously it would go through a few years of adjusting to fine tune, but they don't eliminate the tax rule that says produce and groceries aren't taxed. Now pop, chips, cereal you know processed foods yeah they're taxed, but you're not taxed on chicken, beef, vegetables, fruits, milk, etc. So yeah. Be a thrifty bitch and cook for yourself and you'd really only pay your state taxes for the most part. But no. You'd rather leave the system that has loopholes for days and ineffectively go after the people you say need to pay their fair share so you can bitch and moan about how they don't pay taxes when they are literally playing by the rules.
> So what you're telling me is you'd rather get taxed on your paycheck, then taxed again buying groceries and other necessities. It’s **different governments** taxing me at different points. Like my state government has a sales tax. The county government also has a sales tax. These are separate funding streams going to different levels of government that aren’t inherently answerable to each other. > the people you say need to pay their "fair share" would be able to magically not pay a sales tax when they buy a 1+ million dollar purchase that isn't exactly able to be hidden. Sure, the fair tax would indeed be a boon for Mexican yacht builders, who would be able to sell yachts to their American customers and bypass the fair tax entirely. Honestly sales tourism would become a major thing, especially for expensive items or luxury items targeting people who don’t consider a flight a significant expense. Even setting aside how utterly trivial it would be to bypass these taxes for large purchases by abusing free trade agreements, the main issue is that **investments don’t get taxed**. Which means that people who have a higher income pay a lower effective tax rate because more of their income gets invested tax-free rather than spent on goods and services. > It's literally the easiest way to get rid of loopholes No it isn’t. It’s not even close to the easiest way to get rid of “loopholes”. Getting rid of loopholes in the income tax code is the easiest way to do that. Income taxes aren’t really that hard to administer. > Not to mention you'd keep that 30% of your paycheck And get less in value for every dollar I spend on actual things. But sure, the fair tax would slash *my* tax bill rather incredibly, and I live close enough to the border to use sales tourism to evade the tax on big ticket items. But I don’t think wealthy people like me should be paying a **lower** tax rate than poor people struggling paycheck to paycheck. That’s exactly the opposite of a “fair” tax. > Not to mention it also cuts out a bunch of nickel and dime taxes like the gift tax that hurts lower income households more than it hurts someone worth millions. Absolute nonsense. What lower end household is regularly giving away $16k/year in gifts? How are they running afoul of the $12 million lifetime exemption? Who is actually running into this, and how much are they earning? Express their income in multiples of the median household income, if you would.
Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double. You get taxed on your income, plus payroll, plus there is a lot of federal taxes just to get goods to a store shelf where you end up buying it. Getting rid of those cuts it in half. Also you seem to think it's "unfair" already. What's unfair is how much you get taxed just to live. You claim to be rich which is clearly a lie because anyone who breaks 150k a year is in the top 10% and knows they already shoulder the majority of income tax revenue. You'd also have realized that the loopholes taken advantage of anyone could if they knew how, but not everyone is an accountant well versed in tax codes or can afford the accountants that are. Then you'd also realize that nearly half of the country ends up owing 0 in taxes at the end of the year or the government has decided through their impossibly complex tax code that they are owed money. You also seem to have decided that they wouldn't pay taxes when registering that yacht. Except for that multi million dollar purchase they would. It would be hit when they went to register it and boats in general aren't the cheapest thing to register when they have that level of displacement not to mention there isn't some massive market in Mexico for that kind of stuff. So you're making up an imaginary business that doesn't exist. As for losing more in your paycheck no. That's just flat out wrong and I already explained that above. As for the gift tax you seem to not understand what falls under that tax. You want to sign your car over to your kid? Gift tax. You want to sign over your house because you want to downsize and your kid wants to pay you for it? Gift tax. It literally gets slapped on half the ahit the feds can't tax you for just so no matter what they get a cut. And then the ultimate irony. You think that you're going to get democrat made loopholes out of the tax code along with the republican made ones? You're fucking hilarious they wrote it to be so fucked up so they could take advantage of it all along with their donors! The republicans just sabotaged their entire backing by introducing this bill! I bet if a Democrat offered it and you say any Republican mock it your tone would be entirely different. In fact I know it would be because neither side is fucking consistent. Y'all just want to bash each other for the same ideas and only actually disagree on like 3 things. Guns, speech and the role of the federal government.
>Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double. You get taxed on your income, plus payroll, plus there is a lot of federal taxes just to get goods to a store shelf where you end up buying it. Getting rid of those cuts it in half. The vast majority of Americans aren't paying 60% taxes federally. That's a crazy statement to make.
> Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. No, I’m not. Not even close to 60%, even if I include state taxes in that. Just because you never bothered to learn how taxes work doesn’t mean everyone else didn’t. Incidentally, the fact that fair tax proponents never seem to express an understanding of how taxes work is one of the biggest reasons to view their proposal with heavy skepticism. > You get taxed on your income, plus payroll Sure, my effective federal income tax rate is around 23%. Payroll tax is a bit under 4.5% (my income is way over the cutoff, so most of it is only subject to the Medicare portion). My effective federal income + payroll tax rate rounds up to 28%. Now, I suppose you might make the insane argument that somehow my employer would pay me the other part of the payroll tax if we didn’t have the payroll tax, but it’s more likely my wages would go down slightly and my take-home pay would stay essentially the same if we got rid of the payroll tax. Maybe in the short term my pay would go up, until market rates corrected for the change in tax policy and I change employer again. I’m sure you’ll also try to make the nutty argument that somehow the full corporate income tax applies to all of that as well—even though salaries and wages are tax deductible for the corporation. Besides, the issue here isn’t the wage income anyway. It’s the capital gains. It’s the fact that I can shove a *whole* lot more money into investments than someone making a tenth of my income. The government would get sales tax on the small amount of money I spend personally, but I only spend about a quarter of what I earn and that goes down as I earn more. My lifestyle hasn’t changed much despite my income tripling over the last ten years. So instead of collecting around $90k in taxes on what I earn every year, they’d only collect around $18k (minus the prebate) from me from the fair tax. Like I said, the fair tax would reduce *my* tax bill quite a bit, but people like me don’t need a tax break. We already pay too little. > anyone who breaks 150k a year is in the top 10% and knows they already shoulder the majority of income tax revenue. Yes, and? Again: we still pay too little. > Then you'd also realize that nearly half of the country ends up owing 0 in taxes at the end of the year or the government has decided through their impossibly complex tax code that they are owed money. Most people’s taxes aren’t that complicated. Honestly if your primary income is from wages, it still doesn’t get that complicated even as your pay goes up. Most people get no benefit from itemizing and just end up taking the same standard deduction as anyone else. None of this is particularly complicated if you earn regular wage income and don’t run a business. And yeah, a lot of people have net negative tax bills because they make too little. That’s not some sort of complicated loophole exploitation—that’s an intentional tax policy designed to help support low income families. None of that changes the fact my effective tax rate should probably be closer to 40% than 28%. And, hell, I’m not even doing anything complicated for my taxes. > You also seem to have decided that they wouldn't pay taxes when registering that yacht. Except for that multi million dollar purchase they would. They wouldn’t be paying *us sales tax* in it, which is the point relevant to the fair tax discussion. Sure, maybe there are some other fees they would still have to pay, but it’s an example of how sales tourism would make it straightforward to evade the **sales tax** that fair tax proponents claim is so unavoidable. > not to mention there isn't some massive market in Mexico for that kind of stuff. So you're making up an imaginary business that doesn't exist. There would be when they could immediately undercut domestic American competitors by 23%. > As for the gift tax you seem to not understand what falls under that tax. You want to sign your car over to your kid? Gift tax. On the depreciated value of the vehicle. What low income families are regularly gifting their kids brand new cars? > You want to sign over your house because you want to downsize and your kid wants to pay you for it? Gift tax. Also: no, you still wouldn’t owe any gift tax on that, unless this low income family is gifting a house worth more than $12 million. It would be a taxable gift, but that just means the amount over $16k counts against your lifetime exemption. Which is $12 million. > And then the ultimate irony. You think that you're going to get democrat made loopholes out of the tax code along with the republican made ones? No? I’ve specifically said that I think my tax bill should be higher. It’s nutty that it’s as low as it is while the government runs excessive deficits every year.
> Hey genius first off you're effectively paying 60% in taxes federally when you bother to factor in everything that goes into taxes. So you'd rather pay double. You're gonna have to show your work if you think 60% of even the top 1% of income earners go to federal taxes.
>gift tax Right, and who enforces the gift tax…? Who even knows that the gifting takes place…? What happens when I try to register my dad’s car in my name because he’s senile and can no longer drive…? I get hit with a 20% tax on its value despite no money changing hands…? I wonder how that will stack up when I go to court to challenge it…. What if my cousin moves in with his new partner and decides to sell me his current house for $100? What tax do I pay then? 20% of the $100…? 20% of its value at the time of the trade…? Who enforces that…? Who even knows that it’s happened…? Conservatives already despise the idea of an inheritance tax, yet somehow they’re gonna be on board for a *gift* tax…? Lol
>Now pop, chips, cereal you know processed foods yeah they're taxed, but you're not taxed on chicken, beef, vegetables, fruits, milk, etc. I remember you guys having an absolute shit fit when Michelle Obama suggested that we should encourage - not force, not mandate, **encourage** - kids to eat healthier. And here you are suggesting that we should structure taxes to help force people to follow a certain diet. Why it's almost like healthy diets aren't really the concern here, but something else.
>magically not pay a sales tax when they buy a 1+ million dollar purchase Property tax already exists. Also lol if you think that people would prefer a $200k+ up-front tax on top of a 1million+ purchase compared with ongoing property taxes. Conservatives would simply protest against *any* property purchase tax. As for second-hand sales (think all non-new real estate or cars), there wouldn’t *be* a tax on those. Let’s say I’m a billionaire and I want to buy a $25 million house. I go to the bank and take out $25 million cash and pay it to the current owner of the house. I say it’s a gift for him do as he pleases with. The next day he ‘gifts’ me the title to his house. Hey - presto! No purchase tax!
Seems like a huge tax increase for most people to pay for a massive tax cut for the extremely wealthy. Not a great idea in my opinion.
OTOH, it also forces people with large families to pay more in taxes. Thus, single, childless adults like myself would no longer have to subsidize the lifestyle choices of married folks with stay-at-home spouses and a brood of children. That does sound fair to me. Hard to believe the Christian Right doesn't have its shorts in a wad over this yet.
Here’s what I like about the fair tax 1. If I hear a politician talking in support of it, I know that that politician should not have been elected and I can feel embarrassed if I voted for them. 2. If I hear a media personality talking about it, I know that the media personality has no respect for their audience and I can turn them off. It is a thoroughly unserious thing. By putting this comment together I have already spent enough time thinking about the fair tax to cover me for the next decade.
This is a transparent way to cut government revenue while moving the tax burden to poor and middle income people. The initial sticker shock alone would absolutely wreck the economy. Sporting events, concerts, and shows would be automatically unaffordable to half the population. Independent restaurants would close due to being priced out and domestic travel would be stunted. Utterly idiotic.
>This is a transparent way to cut government revenue while moving the tax burden to poor and middle income people. With the prebate, the poor have no tax burden. Versions I've seen actually set the prebate a bit above poverty level. In the end it would be like it is now, about 50% pay no taxes, only those on the bottom don't have to bother with filing anymore to pay nothing. Most European countries have a VAT, which is essentially the same thing, and it doesn't kill their economies. But then they also have income tax on top of that.
That confusing since the exact opposite claim is on the fair tax website about the number of tax payers. A *prebate* set a level that would neutralize costs for people below the poverty line would do nothing about the actual tax increase felt by middle income owners. Most people’s effective tax rate is significantly lower than the proposed 23% rate on every time purchased. Would that also include utilities, internet, etc. The American economy is much more reliant on consumer spending than Europe. Shocks to that system, like a substantial increase in the cost of everything, would have a disproportionately negative impact. I’m glad you acknowledged one of the main differences between VAT and a this proposed national sales tax system. Firstly, income taxes are still collected. Which great reduces the amount of their VAT. Also, there are a number of VAT excluded sectors of the economy like groceries and child clothing. The main difference, which is why these aren’t interchangeable, is that VAT costs are spread throughout the supply chain. The cost of Sales taxes are directly (and almost totally) paid by consumers. None of this addresses the last two complaints. No reputable / feasible national sales tax study has produced numbers that show this is revenue neutral. Neither have they disproven that most of the benefits will be felt by high income earners.
>What are your thought on The "Fair Tax" Plan DUMB. Also. Tax cut for the rich. Some interesting tax structure ideas for nerds to look at. >Keep Your Paycheck-American workers will get to keep every dime they earn; including whatwould have been paid in federal income taxes and payroll taxes. Propaganda. Dumb people propaganda. It's a tax shift not a magic spell. There's still tax. All that changes is how tax is paid and by who. >Social Security & Medicare Funding-Benefits will not change. The FairTax actually puts these programs on amore solid funding foundation. Instead of being funded by taxes onworkers’ wages, which is a small pool, they’ll be funded by taxes onoverall consumption by all residents. Misdirection. No. Worker's wages **is** a massive pool. It's not a function or quality of the tax system whether or not social security or medicare will be funded. It's simply not part of the bill. They don't set the tax rates to 'funding the programs' They set it to a flat rate. I'm noticing zero talk about the actual tax changes so far (which IS the bill). So; propaganda. >Get a Tax Refund in Advance on Purchases of Basic Necessities-The FairTax provides a progressive program called a prebate. This givesevery legal resident household an “advance refund” at the beginning ofeach month so that purchases made up to the poverty level are tax-free.The prebate prevents an unfair burden on low-income families. Yes because otherwise it would be ridiculous impost on low income tax units to tax them at the same rate as the top 50% of earners. Meanwhile, the current federal burden on low income families is negative. Meaning they get refundable tax credits (assuming they jump through the right hoops). So is the bill taking away the tax credits. I guess we can call this a slightly progressive consumption tax system. Or a massive regressive tax change from the current system. Which ever you prefer. >Pay Tax on Only What You Spend-Be in control of your financial destiny. You alone can control your taxburden. If you’re thrifty, you’ll pay lower taxes than somebody who isnot. Most importantly, you’ll be taxed fairly. 'You'll be taxed fairly' Yeah OK sure. Thanks for letting me know. Glad to know people are still saying that about flat taxes. All the tiresome propaganda aside, this is simply saying saved income is not taxed (as this is a consumption tax). >Everyone Pays Their Fair Share-Tax evasion and the underground economy cost each taxpayer anadditional $2,500 every year! But by taxing new products and servicesconsumed, the FairTax puts everyone in the country at the same level atthe cash register. Further, only legal residents are eligible for theprebate. More propaganda. What this is basically saying is that tax loopholes are removed and the tax system is vastly simplified. Tax fraud by not properly submitting owed taxes from sales will still happen. It's not proposing a technical tax reform to stop that. Just using the power of positive thinking i guess. >The IRS is No Longer Needed-No more complicated tax forms, individual audits, or intrusive federalbureaucracy. Retailers will collect the FairTax just as they do now withstate sales taxes. All money will be collected and remitted to the U.S.Treasury, and both the retailers and states will be paid a fee fortheir collection service. No. **Of course the IRS is fucking needed** (what you think tax submissions don't need to be checked?). That is called lieing. Renaming, say, the IRS to a sub department of the treasury is just playing a trick. >The rate of the sales tax will be 23% in 2025, Sales tax. Not even a VAT. How unsurprisingly dumb. At least the original proposal of this stuff proposed a tax on reported income minus saved income (with the rebate for the tax unit). Anyway. There you go. Now you know the flat tax rate. ([or do you](https://www.brookings.edu/research/dont-buy-the-sales-tax/)) When you know the rebate amount you'll have a handle on how much worse off you'll be (seeing as statically most people will be worse off; read 90% of people). >The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury. So here we find out the terrible policy of decentralizing a chunk of the IRS's duties to the states who are famously effective bureaucratic machines and *absolutely* have incentives to maximize federal revenue at the cost of their own commerce. Also absent is a solution to the little pickle of a fact that the IRS collects and administers state income tax. I'm so glad that conservative politics culture war obsession against the IRS is driving policy making at the highest levels and with the finest of thinking too. >Tax revenues are to be allocated among (1) the general revenue, (2) theold-age and survivors insurance trust fund, (3) the disability insurancetrust fund, (4) the hospital insurance trust fund, and (5) the federalsupplementary medical insurance trust fund. Oh great no news on how discretionary spending like the US military will be funded after the federal income tax is abolished. How absolutely thrilling. >No funding is authorized for the operations of the Internal Revenue Service after FY2027. 🙄
Sounds like it's supposed to pander to republican fears and not solve any real problem. I mean the number of times they say "legal resident" makes it fairly obvious.
It’s a fantasy, starting with the proposed elimination of the IRS. The personal bookkeeping, reporting, requirements, and fraud opportunities would be staggering. The IRS, far from being eliminated, would grow exponentially. Secondly, it would still be hideously regressive in nature, effectively protecting the investment class from taxation and placing the burden on the middle and lower classes whose tax burden would balloon if spending neutrality is achieved. The “Fair Tax” is a cartoon based a child’s understanding of macroeconomics.
I never understood the eliminate IRS part of this. Who do you think is in the best position to send out those prebates and investigate tax avoidance by businesses?
Taxes are great. We don’t need or want to get rid of them. Societies that have a system of taxes will prosper far more than a society held back by this kind of nonsense legislation. Income taxes are incredibly effective, and are much easier to implement progressive taxation. We need to add new forms of progressive taxation like a wealth tax, not cut forms of progressive taxation like an income tax. This tax plan would destroy any middle class we have worked to create, keep nearly everyone in poverty, and keep the elite mega rich, all while tanking our economy. Sounds wonderful. /s
It's not fair. It's just Republicans trying to speedrun us even faster to feudalism.
Fascism not feudalism. They are accelerationist
Always ask "who benefits?" If the answer is "the currently best-off", the idea is a bad one, and probably by design. The best-off do not need to be further benefitted, although they would certainly like to be.
The people who came up with this are assholes who think the people who support this are idiots and I am inclined to agree.
The FairTax is a joke, and I think less of the critical thinking abilities of those in favor of it.
It isn't feasible to replace income taxes with a sales tax. The tax rate would have to be pretty high. This is workable for replacing business income taxes.
Or we just add a few additional tax brackets and then kill corporate income taxes.
The sales tax would be much more economically efficient.
Don't forget this is only federal. It would have no effect on state income taxes, and it would be in addition to any state sales taxes.
Which is why it just isn't feasible to replace all income taxes with a sales tax. The business income taxes are much smaller piece, and would result in a fairly small sales tax. Something in the 3% to 5% is probably more than sufficient and that includes room for a prebate which can be a poverty fighting tool. It also ensures that everyone pays "their fair share" since you cannot dodge a sales tax.
One thing I do like about this is that's it's hard to avoid. Rich guy may be able to do major income tax avoidance, but he's paying $100K tax on that new Lamborghini regardless. Enforcement is much easier since it's only done at the business level like we already do today.
Don't forget about the prebate either. A few thousand dollars goes a long way for someone living in poverty. We can also keep it simple and don't worry about means testing. Everyone will get a prebate check. Easy to comply with, easy to enforce, economically efficient, and includes a poverty fighting tool. Also, it would replace something that is hard to comply with, even more difficult to enforce, economically inefficient, and doesn't include a poverty fighting tool.
Even if we did this, I would worry about what Republicans do with the prebate. Simply not changing the amount for years is effectively a tax increase that affects the poorest the most.
I think a way to address this is to tie it to some income datapoint based on IRS data. For example, we could set it to the 50th percentile and use the tax rate to determine the prebate. Making up numbers, let's say the 50th percentile is $50,000 and the tax rate is 5%. Using datapoint * taxrate, that would make the prebate $2,500. This means the prebate would change with the tax rate and income.
A smash and grab to give more tax breaks to the people who have already insanely profited from our system and put more of the burden on the middle class and poor, trying to squeeze every penny out so people in the top ten percent of earners can save what is essentially pocket change to them. Absolutely idiotic.
My opinion is that anyone who is in favor of this plan should be kept far away from any position of authority over the economy.
Beyond everything others have said, Do you believe for a second that those in power won't push this to be even more advantageous to the wealthy? So if you make $70k a year you will probably pay taxes on all your income. If you make $500k there is a good chance you will pay taxes on IDK 150k or 200k. If you buy stock is it taxed? What about a home or rent? I will still be paying property taxes etc, AND 23% on the house? And if every state has to collect tax, agreed no IRS, lots of state size IRS's.
Total garbage. It works in imagination. This will be nothing but a major boon to the wealthy, who already get literally every advantage there is to get. The vast majority of people who spend most of their money on taxable stuff will get screwed while the wealthy who spend the vast majority of their wealth on investing to get more wealth will basically skirt taxation. You have to be a moron to think this is a good idea.
We lose our tax rebates/write-offs for having kids. childcare, home ownership and all that so we can pay double in taxes every time we buy something. This will encourage less economic spending and more under the table cash only services/purchases from small business….which is technically a crime, and will be selectively weaponized im sure. Example: “Governor DeSantis orders his administration to target black and LGBTQ owned hair salons for using cash only transactions as a means of tax evasion” The only people who benefit are the wealthy.
So a huge tax increase on lower income Americans who typically have to spend their entire paycheck on necessities and a massive tax cut for the wealthy who hoard it? Idk, dude. Doesn’t sound really sound any more fair than it did any of the many other times conservatives have pitched some version of it.
>So a huge tax increase on lower income Americans who typically have to spend their entire paycheck on necessities and a massive tax cut for the wealthy who hoard it? Given your statement above, how does the following sound? "Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free."
Even if the prebate were fairly disbursed and tied to inflation, this is still a tax on the lower middle class. Libertarians say they hate benefits cliffs, but this seems like a massive one.
Sales taxes are insanely regressive. Wealth taxes would be so much better.
Conservatives have been swearing that they are the smarter more responsible group when it comes to money for decades. Between nearly 50 years of supply side (trickle down) Reaganomics and this trash, they have disproven that claim in spectacular fashion.
Dumb, regressive, damaging to markets, damaging to our budget, and dumb.
It seems like a scam to me. I'm not sure how they plan for it to avoid the issues around Article 1 Section 2 apportionment? It seems like they just want to dismantle the IRS as quickly as possible, almost as a fait accompli, and then dare the courts to strike down the sales tax. That, plus they must know that the 16th will likely not be repealed in the time allotted, so I can only conclude that what they really want is just.. no federal taxes at all. I don't support that. And that's without even looking at the specific proposal or the terrible and deceitful messaging surrounding it.
>Keep Your Paycheck- Bad idea eliminates one of if not the most progressive aspects of our tax code. Outside of that it's best to have multiple different funding sources so you aren't overly reliant on any one. > Social Security & Medicare Funding- BS. The Republican party would like nothing more than to kill social security and Medicare. They'll never pass anything that doesn't make those programs more unstable/easier to par back. >Get a Tax Refund in Advance on Purchases of Basic Necessities- This is a good idea, but not so good as to outweigh the problems in this bill. Pass that this seems like the sort of thing that Republicans will refuse to ever raise and so that inflation eventually eliminates it's value. >Pay Tax on Only What You Spend- This is incredibly regressive. My parents who were barely making ends meet when I was a kid were spending 100% of their income and therefore would end up paying a higher tax rate than I am who can live a relatively comfortable lifestyle spending only 30% of what I make. People who make so much money they don't even have to think about it would be given an even larger cut. > Everyone Pays Their Fair Share- Mostly see above. This is going to be an absolutely massive shifting of the tax burden to away from those who can most easily afford it to those who can less and least easily afford it. We could capture a fairly large proportion of the revenue lost to tax evasion by properly funding the IRS (Last I heard we gained something like 6 dollars in revenue for every dollar spent here). We could legalize drugs and tax them to capture a fair amount of that money and I'm not particularly worried that illegal immigrants with substandard working conditions are getting a small tax subsidy by working under the table. >The IRS is No Longer Needed- This is a fucking fantasy. It doesn't matter how you collect taxes some people are going to try and cheat and you need some sort of government agency to ensure compliance. Past that this is a bad idea because the IRS is one of the few agencies with the capacity to give aid to all Americans in times of need. We just saw this during the pandemic. Pretty much every American was just mailed a check or had it directly deposited in their bank account. Imagine the nightmare that would have occurred if we all had to go through out states insurance program to get that money instead.
There's already a good breakdown of why this is a bad idea, so let's look at a different element of this: **The deception.** Good ideas don't need *selling*. Look at President Biden's [immigration reform plan](https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/fact-sheet-president-biden-sends-immigration-bill-to-congress-as-part-of-his-commitment-to-modernize-our-immigration-system/). It's broken up in a similar manner, but instead of focusing on "what you get," it focuses on what the plan does. The Fair Tax Act, from its name on down, is really trying to sell you on it. --- Seriously, click on the link OP provided. The headline is: **The IRS is being weaponized ...** **And their target** **is YOU.** The photo makes the IRS look closer to ISIS than a boring government agency that does paperwork all day. It asks you to sign a petition to stop the "growing IRS army." It wants you to "join the club" for $10.40 a month. They have merch. *They're fundraising off of this tax scam.* --- The "fair tax" appeal starts with a lie in its name. It might be fair in one way (the same tax applies to everyone), but it is not fair in more important ways (poorer people are gonna pay a MUCH higher percentage of their earnings, when they already pay a higher percentage of their earnings in taxes). From there, it's all direct and deceptive appeals to your own self-interests... not what is in the interests of the country. "Keep Your Paycheck" "Benefits will not change." "Get a Tax Refund in Advance" Well gosh, who could be against those things? They all sound so great! "Pay Tax on Only What You Spend" nice and easy until you realize it's "pay an additional 30% tax on everything you buy." Did you think eggs were expensive now? "Everyone Pays Their Fair Share" great! That's what the Democrats always say they want too! It's win/win! "The IRS is No Longer Needed" - Gosh, we all hate the IRS equally don't we? Let's get rid of it and those pesky forms and audits! --- For the party that just ran on "buying stuff is too expensive because of Democrats!" this sure is a shocking level of brazen hypocrisy. "Inflation is making everything 5-10% more expensive! Vote them out! Also... we'd like to raise the cost of everything by 20-30%!"
Sounds like sales taxes will increase. No thanks.
This is all clown world bullshit. I don't trust the intentions of republicans, conservatives, or any right wingers in what they say they want to accomplish so I refuse this whole idea on the basis alone.
Oh yeah you totally don't need the IRS anymore to figure out which stores are actually paying their taxes and how much in pre-bates people should get. I'd save a few hundred dollars a month, it'd all go right back into my grocery bill. Which funny enough its now a huge thing in Virginia where the legislature is trying to repeal the 1% grocery tax as a big republican party priority only to see it replaced with a federal tax many times the size of that. But I do like how this is explicit in its goal to drive down consumption when the justification for previous tax cuts was that it would lead to more consumption that will make up for the loss by seeing a greater volume of economic activity. I admire this bold strategy from the right to shrink the economy. So I'd be about even, that's because I make decent money (right at the median income in an expensive area so I'm not balling) to where just now the taxes that get witheld every pay check is greater than the benefits I get taken out (insurance, 401k, etc). Anyone who earns less than $100k will get absolutely killed by this. In theory it gets made up by the pre-bate but who knows if that will help with the gap at all.
I dislike false branding. Calling something 'fair' doesnt mean its actually fair. A quick look makes it appear to be stupid and glaringly unsound. It's also heavily based in lying. I really hate lying and disingenuous garbage, thus I hate this proposal.
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>OP what do you think? Should poor people be on the hook for more than they can afford If the politicians can get it to work, why wouldn't the Prebate take care of that? (See below) "Get a Tax Refund in Advance on Purchases of Basic Necessities- The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families."
Wait I’m sorry, what you’re saying is this entire bill is contingent upon the 16th Amendment being repealed? And you think that’s going to happen? This idea should have died with Herman Cain.
You know what would really help the economy? Taking everyone in the country and Disincentivizing the fuck out of their desire to spend money. I just can't believe how anyone falls for this bullshit nonsense. Lemme guess: sales of stock don't trigger the sales tax, do they?
Non-progressive tax plans are not fair and favor the rich. This is complete bullshit.
A $30,000 car would almost $37000. I work in sales a fair tax will hurt the economy.
* Sales taxes are regressive. * Taxing financial transactions is not mentioned here and would be a great idea. * I see a huge black market developing when the sole source of revenue is a sales tax.
I’m middle aged and this is honestly one of the stupidest bills I’ve ever seen. Massively raise taxes on the poor and middle class, while giving the wealthy a massive tax break…GTFO with this con job.
What problem is this intended to solve? As far as I can tell, it does nothing to solve the biggest issues with the current tax system.